Fuel and energy export of Russia: volumes, structure, dynamics

newsletter 09/02/2016

The past year has challenged the Russian economy and federal budget: the country has entered the period of unprecedented low prices on fuel and energy goods being the main export items.

Oil price has reduced to the 12-years minimum level; and this negative tendency will be hardly changed in the current conditions. Keeping the OPEC quota on the same extraction level, the impact of OPEC leaders Saudi Arabia and the UAE, maximum raw materials stock of the USA, entering the foreign markets of Iranian and American oil, contraband supplies from Syria and Iraq and the general slowdown in the world economy make the forecasting on the raw materials quotation quite conventional.Reduction in extraction of shale oil, withdrawal from the market of the majority of shale producing companies, as well as inadequate investment in the oil industry (because of low quota) will finally lead to reduction in supply. However, no one could predict when this happens.

This raises the question of whether Russia is so depend on oil and gas export. What is the structure of oil and gas export?

First of all the following should be noted: in January – October 2015 the supplies of oil and gas products to the foreign markets came first and reached 184,9 bln dollars in monetary term, that is 64% of total export of the country. In January – October 2014 the share of fuel goods was 70,7% of total export. However, the decrease in export in November – December 2014 has reduced the annual rate to 69,5%. So, the share of oil and gas products export has fallen by 6,7% during the year.

Share of fuel and energy goods in monetary terms in the general export structure, %

Picture 1. Share of fuel and energy goods in monetary terms in the general export structure, %

In January – October 2014, the export of fuel and energy goods has reduced by 38,2% (299,2 bln dollars) in monetary term. The ruble devaluation has compensated the revenue reduction and let to increase supplies in volume term to the foreign market; supplies to China were double increased.

«In 2015 oil export from Russia will increase by 7,5% (to 238 mln tons) in comparison with the previous year. Oil extraction will reach the record 533,6 mln tons, that is 1,3% higher than in the previous year. Oil offshore production will increase by 16% (to 18,8 mln tons)».
Aleksandr Novak, Minister of energy of the Russian Federation, December 24, 2015.

 

The reduction of fuel resources share in the total export is not explained with decrease in volume term supplies. The reverse process of increase in supplies to the foreign markets takes place. Today the export restructuring in favor of other commodity groups and items of income is observed.

The structure of fuel and energy goods export disproves the ingrained vision of Russia as a country producing nothing but oil. Only 41,5% of export in monetary term fall to the share of crude oil; 31,6% for the share of recycling oil products with high added value – gasoline, white-spirit, kerosene, gas oils, black oil, spindle and lubricating oils, white oils; 21,7% goes for natural gas and 4,3% for black coal (see Pic. 2).

Commodity structure of fuel and energy goods export, January – October 2015, % of monetary term

Picture 2. Commodity structure of fuel and energy goods export, January – October 2015, % of monetary term

The Credinform experts consider the continuation of commodity structure diversification under the conditions of low ruble. The producer oriented on foreign markets has already got competitive advantage due to the reduction of the final offer cost for foreign counterparties. Russian producers of grain, metals, fertilizers and weaponry have already marked changes and expand their presence abroad.